Value Creation at its best.

Great article at The Next Web about how Apple’s long term strategy will likely dominate the tablet market.

They project a ten year dominance, similar to the experience of the iPod. In the article they provide, what I believe, are 7 compelling reasons for their dominance.

1. They are outselling (not just out shipping) by a factor of 10 to 1.
2. Tablets are not smartphones.  So competitors have to compete with Apple on device profitability alone.  In the tablet market there are no data plan subsidies to back them up.
3. Apple’s 336+ stores provide a high touch environment to learn whether to buy an iPad.  Moms and grandparents will be converted more by that experience than a tethered tablet at a Best Buy or WalMart.
4. Apple has the profit and cash reserves to invest heavily in the latest technology (solid aluminum skins) that make their designs more elegant and user friendly commanding higher prices and better experiences.
5. Apple, based on the above, has altered the relationships with suppliers, obtaining agreements that lock in their margins and lower cost advantage on the new technologies they fund.
6. Apple’s ecosystem.  Mac, iPod, iPhone, iPad.  Once they pull you into the fold it’s hard to leave as the devices work so well together.  This phenomenon is sure to accelerate with the advent of the iCloud in the fall.
7. It works better.  Technically the user experience is smoother with the iPad.  They give reasons why the touch interface works better based on the underlying technologies and iOS software.  Watch for improvements in the next iPad.

It’s a compelling read on value creation at its best and the execution of a business model strategy.  A must read for all executives about how to pull all the pieces together into a cogent sustainable differentiation strategy.

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I hate waste; especially wasted conversations.

In the last 9 months I’ve devoted much of my time to exploring the dynamics of conversations. I’m intrigued by them for a couple of reasons.

1. We spend gobs of time at it. (Meetings in person, meetings by webinar, emails, phone calls, etc.)
2. Nothing ever gets changed until we have a conversation about it.
3. In my experience most conversations are wasted – very few decisions are made. Our meetings are such a waste of time is the most frequent complaint I’ve heard in my career as a consultant in the last 30 years. And because I help my clients deal with strategy, they are most often referring to conversations about that – strategy.

I can’t help with all conversations but I am going to share with you what I’ve learned about strategy conversations.

In 30 years of  ”talking strategy” I’ve noticed three definitive patterns in strategy conversations.

Pattern 1:

Strategy conversations are not homogeneous. They are comprised of inter-related sub-conversations. Each sub-conversation has a definite role to play in the overall conversation. When a sub-topic is ignored or not agreed upon, confusion invariably reigns and wasted time accumulates.  For example, there is no point talking about goals if you don’t agree on the vision.

Pattern 2:

Strategy conversations have only one purpose. Even though there are several sub-conversations they are driving to one end in mind. When they don’t, nothing gets implemented and nothing changes.  You either allocate resources or you don’t.  If you do, you move forward.  If you don’t, you don’t.

Pattern 3:

Strategy conversation are ubiquitous. They happen everywhere, all the time and with everyone from the front line employee to the Board of Directors. Their impact varies of course by their level. But, everyone, everywhere is having strategy conversations. That’s why execution is soooooo difficult. Aligning all these conversations and the actions that flow from them is a gigantic task. Yet, we wouldn’t want it any other way.  That’s because everyone is allocating resources - even if it’s just their own.  Either the resource they allocate (their time at a minimum) is on strategy, or it’s not.  So, when they talk about what they are going to do today at the water cooler it’s either moving you forward, or it’s not.

Strategy conversations defined

The following graphic illustrates strategy conversations; it’s purpose, its sub elements and the relationships that exist between them. I share them with you to bring clarity to you about the behaviors I’ve observed that occur when people engage in strategy discussions.  We plan strategy from right to left. We execute strategy from left to right.

The 7 elements that define strategy

Unpacking Strategy Conversations

You can learn more about Strategy Conversations from the following slide share link.  Enjoy.

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Unpacking stories to find the truth that lies underneath is always fun.  Here’s a story about a janitorial firm in Cincinnati Ohio that is both inspiring and, reveals how to escape commoditization by differentiating.

First the story.  The basic facts are these.

• They are a janitorial firm (since 1972) that service office buildings over 100,000 sq. ft.
• Like companies in the industry, their employees were largely immigrants looking for a first job that could lead them somewhere else.  After all, who wakes up thinking of cleaning toilets as a career?
• They like everyone else suffered from massive turnover – 400% a year (Yes, that’s 100% every 90 days.)
• You can imagine the turmoil and the low, low margins this level of turnover would create.
• So they implemented a bold idea.  They provided a Dream manager for their employees (all of them).   The dream manager met monthly with the employees and helped them articulate their dreams, plan for it, and because a financial component was usually involved, helped them save for it.

Think about the boldness of this idea for just a moment.  How crazy is that?  A dream manager?  Who has ever heard of such a thing.  A company that spends money helping you achieve your dreams?

Back to the story.

• The Dream Manager Program worked. It slowly gained momentum as employees started achieving their dreams.
• It really took off when Rita bought a house.  Then everyone saw that they too, could realize their dreams. (A car, a good education for their kids, a proper Christmas, a vacation back home, simple things many of us take for granted.)
• The results were (are) incredible.  In five years, 2,785 significant dreams were realized, turnover fell to 4%, gross revenue tripled, profits rose every quarter.
• Their costs are lower. Their client satisfaction tops everyone else (As you can imagine, their employees are very loyal and willingly work very, very hard). No competitor can match them.  They are differentiated.
• BTW, there are now 11 full time dream managers on staff.

What does this all mean?  Should we all hire dream managers as part of our business model?

No, not necessarily, but it does teach us an valuable lesson about how to differentiate.  It starts with a new phrase - value-disrupt.

A rose disrupts the moment. To differentiate, disrupt behaviour

Greatness has always disrupted the norm.  From fire to electricity; from writing to the iPod; different objects, different models, different ideas all inspire latent behaviours to willingly emerge that create new value.  (That’s they key!!)

Let’s unpack the story and discover the formula for differentiation.  As we go through the story we underline the elements.

1. Jancoa recognized a human motivation that existed in their target group.  In their case – the motivation of their employees to dream, to hope for a better future.  (While this motivation is universal for most of these immigrant employees they had long since stopped dreaming.  After all, life taught them they would never reach their dreams.)
2. To enable that motivation to express itself they created a disruptor – (The combination of a resource and associated interface)  = the dream manager with the monthly meetings.
3. The value-disruptor provoked a latent behaviour to willingly emerge.  Employees articulated their dream, planned for them and with the help of the dream manager, monitored progress a monthly basis until the dream was realized.  They did so without being coerced.  They wanted to do this.  A latent behaviour willingly emerging is the KEY.  It’s a new behaviour that a target group willingly adopts that causes a disruption to occur.
4. It disrupted the relationship between the employees and the company.  Duh Yeah!  I don’t just clean toilets here.  I make my dreams come alive.
5. That value-disrupted their markets.

So there you have it, the formula for differentiation.  I’ll return to this value-disruption concept in future posts.

Tips on disrupting

1. Focus on the new behaviour you wish to emerge.  As a result of changing your offer will they do different than they did before?
2. Test it for willingness.  Why will the target do it willingly?  To answer this question think about how easy it will be and how strong the motivation is.
3. Finally, remember that technology by itself is useless.  What is the work process that surrounds it that makes it useful?  Fire by itself just burns.  When you have a work process to control fire you have something useful that will value-disrupt.

Many thanks to Alex Manu who introduced me to this concept.

Thank-you for visiting www.ennova.ca.

You can buy their book about their experience here.  It’s a great holiday gift.

Since February 2009 Jonathan Burns and I have had the privilege of speaking to over 100 CEOs of Canadian firms through the Presidents of Enterprising Organizations network and the Women Presidents Organization (WPO) on the subject of Web 2.0.

Here’s what Jonathan has written about our experience.

The companies whose executives have seen the presentation include Lyreco, Energizer, McMillan, Toronto Board of Trade, Consumer Impact Marketing, Melitta, Kids Help Phone, GEO Global Network, Tyco/DSC, Swiss Natural Sources/Swiss Herbal, Wardrop Engineering, Jan Kelley Marketing, Marsulex, Kinectrics, Progistix Solutions/SCI Group, Peerless Electric, Pathway Communications, Glenway Golf & Country Club, Junior Achievement, the College of Massage Therapists of Ontario, RHR Canada, Triumph International, Summerlea Office Solutions, LaserNetworks, Soft Care Corp, HostMySite.com, Aseco Integrated Systems, Greenblue Systems, Skyway Wind Energy Group, Torino Drywall, 360 Visibility, StaffClick Personnel, Blazing Design and The DOUG Agency.

Most CEO’s have heard of web 2.0 but they don’t really know what it is. When I ask them they say “it’s Facebook and Twitter and all those kind of web programs my teenagers use.” At the start of every meeting we ask them to share how Web 2.0 makes them feel. From younger groups (CEOs in their 40s) I hear “exciting, opportunities, possibilities, connections.” From older CEOs (50+) I hear “it’s weird, my kids are into it but I don’t get it, an invasion of my privacy, I feel left behind, I feel a loss of control, I feel overexposed, it’s a big waste of time.”

The big idea I share with CEOs is that Web 2.0 is fundamentally about the shift from publisher generated content to user generated content. Leveraging web 2.0 for your business means harnessing the incredible power of user generated content. But it requires a huge paradigm shift and many companies are getting left behind.

In a July 2009 global survey of 1,700 executives on Web 2.0 by McKinsey & Company “69 percent of respondents report that their companies have gained measurable business benefits [from Web 2.0], including more innovative products and services, more effective marketing, better access to knowledge, lower cost of doing business, and higher revenues.” Click on the chart to the right to see the details of this.

I quickly realized that the technology aspect of Web 2.0 is of secondary importance and it’s rarely why the implementations fail. The primary issue is always people and their work processes or online habits. The introduction of internally facing web 2.0 technologies into a workplace is fundamentally about changing people’s work processes, the way they get their work done. And if it it’s not planned around and integrated into the way users currently get their work done, then you have a sure recipe for failure.

The other observation I made is that internal web 2.0 applications are often brought on by the IT department to solve a particular problem and are rarely considered in the broader context of the firms business model: how they are organized and how they make money. Yet when you consider how you might leverage the power of user generated content in the context of a firm’s business model you open up the potential to enable significant profit growth by making strategic changes to the actual business model.

Today most small and mid-sized firms will be able to find ASP/SaaS (ready made) solutions for their Web 2.0 needs. We have spent time researching and engaging with the top ASP/SaaS solution providers for implementations for 5 users all the way up to enterprise installations for thousands of users so we can recommend the best solution for your specific needs. We have also researched the best technology partners for customized solutions if you want to build off your existing Microsoft Sharepoint platform and get more functionality than the ASP solutions provide.

Companies that are finding our services most useful are $10-500 million Canadian companies where the leaders are aware of web 2.0 but don’t understand the opportunities it presents or how to move forward to capitalize on them. Our particular specialty is guiding management teams through the discovery, decision and implementation phases built on a mutual understanding of the firm’s business model.

If you know anyone who fits this description we’d be happy to have a chat with them.

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The recruiting industry has always been lucrative. With 35% of a recruited individual’s annual salary as a typical fee it certainly paid well. Except there’s a new kid in town and he’s good and much cheaper.

To understand the disruption you first need to understand the basics of the recruiting industry. It’s fundamentally an arbitrage play. Recruiters typically have deep relationships in either an industry sector, (e.g. manufacturing) or a functional area (e.g CEOs).

They use these assets to find the right person for the job – their core value proposition. While they perform many valuable activities along the way: Job posting, advertising, screening, interviewing, etc., it’s their ability to FIND the right candidates to put through the process that people are paying for. And that’s based on experience and relationships and networks. The best of the best always had the right connections and networks and that’s what you paid for. Hence the “pay a percentage salary” versus paying for time spent.

But what is LinkedIn but a network of relationships of 40 million professionals around the world? And for a measly $500 per month you can have access to them all. And what’ s even better, the recommendations on each profile are real. They can’t be faked. So, combine access to the information of 40 million professionals, inexpensive geo-targeting ads, with an ability to read and follow-up on recommendations and you have not only replicated the recruiters network, you’ve taken it to a whole new level.

Take this asset and put it in the hands of a former HR professional and magic occurs. The revenue models are changing to a time based fee versus access to the network base fee. And with fees 1/3 to 2/3 less than what traditional recruiters charge serious disruption is going on. Add that to a recessionary economy and now is not a good time for recruiters to say the least.  They are being commoditized.  How will they escape?

So what lessons can we learn?

• Social networking sites are huge repositories of personal and professional information. (no kidding)
• Prior to these social networks, industries had high costs to access specific types of this information and so their revenue models reflected that. (Recruiting and professional experience and recommendations)
• With cheap access to this information on a massive scale, new much cheaper revenue models become available, disrupting the old industries.

So what does the future bring?

Here is another industry that this massive information storage could disrupt. Personal behavioral information and the personal insurance industry.

What other industries do you think could be disrupted based on access to previously expensive information about people?

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